Binance, one of the largest crypto exchanges in the world, has seen its BUSD stablecoin extend its recent declines due to issues with mismanagement involving the exchange’s pegged tokens.
The circulating supply of BUSD fell to $15.4 billion on Wednesday, a reduction of $1 billion over the past week and $2 billion in a month, according to CoinGecko.
This decline comes after Binance botched a report about its digital asset reserves in December, causing users to withdraw funds from the exchange.
BUSD is a dollar-pegged stablecoin issued by Paxos Trust under the Binance brand, and it is backed by cash and U.S. Treasury bill reserves.
Stablecoins like BUSD are used by traders as a way to convert traditional fiat money to digital assets and facilitate trading in cryptocurrencies.
Recent reports have revealed errors involving Binance’s wrapped token derivatives, known as Binance-peg tokens.
Blockchain research firm ChainArgos found that Binance-peg BUSD was not always fully backed by reserves during 2020 and 2021.
Binance acknowledged the breaches and claimed they have been fixed. Bloomberg also reported this week that the exchange mixed customer funds with the collateral of Binance-peg tokens.
Adding to the woes, Binance’s banking partner Signature Bank, will halt transfers smaller than $100,000 using the SWIFT interbank messaging system starting February 1st.
These recent issues have resulted in BUSD falling behind stablecoin rivals in the competitive market. BUSD lost 11.3% of its market cap in a month, while USDT gained 1.3% and USDC dropped just 1.9%, according to data from DefiLlama.
Despite this, BUSD is the only one of the top three stablecoins that grew its market value throughout last year.